Insuring your Home
It is important to insure your home on two levels, both the structure of the property itself, against fire and flood and the contents against theft and damage. You are obliged to take out buildings insurance when you take on a mortgage, but don’t necessarily have to accept the policy on offer. It pays to shop around for policies that suit you best.
Buildings insurance may cover things like garden sheds and fitted kitchens as well as the house itself, so you need to check the small print carefully. Contents insurance, on the other hand, covers the movable contents in the home, such as jewellery and furniture, as well as electrical appliances, clothing and ornaments. There is usually a limit to the value of any one item, so if you have an original Picasso in the bedroom you should get it insured separately. Items that you take out of the home on a regular basis may also be covered, such as cameras and bicycles and the contents of your handbag.
Indemnity contents insurance is the basic type, but if an item is lost or damaged it will only be replaced with one of approximately the same age. On the other hand, the more popular ‘new for old’ contents insurance replaces it with a completely new equivalent.
Premiums can be reduced by combining contents insurance with buildings insurance and by accepting a higher level of excess, which is the amount you elect to pay out of any claim.